The City of London and Social Democracy

Aled Davies explores the decline of social democracy and the rise of neoliberalism in Britain, focusing on the pivotal role of the City of London.

In The City of London and Social Democracy, Aled Davies delves into the transformation of Britain's economic landscape from social democracy to neoliberalism during the late twentieth century. He investigates the intricate dynamics between the financial sector and the state in post-war Britain, raising critical questions about the forces that led to this shift. By examining the role of the City of London, Davies highlights how changes within the financial sector during the 1960s and 1970s significantly weakened the state's ability to foster a robust industrial economy.

The author argues that the institutionalization of pension and insurance fund investments, along with the fragmentation of the domestic banking system, played pivotal roles in this evolution. Furthermore, the emergence of an unregulated international capital market, centered in London, and the collapse of the Bretton Woods monetary system further constrained the social democratic economic strategy. Despite attempts to adapt to these changes, the traditional belief that national prosperity hinged on industrial growth was increasingly challenged by a new narrative that positioned Britain as a financial and commercial powerhouse, a perspective championed by the City itself.

Ultimately, The City of London and Social Democracy situates the neoliberal shift of the Thatcher era within a broader context that encompasses material, institutional, and cultural factors. This comprehensive analysis offers valuable insights into the historical forces that shaped contemporary Britain and the enduring legacy of these economic transformations.